[206] in peace2
Chomsky on IMF debts
daemon@ATHENA.MIT.EDU (F. AuYeung)
Tue Apr 18 14:15:31 2000
Message-Id: <200004181815.OAA16979@w20-575-57.mit.edu>
To: peace-list@MIT.EDU
Date: Tue, 18 Apr 2000 14:15:19 -0400
From: "F. AuYeung" <auyeung@MIT.EDU>
------- Forwarded Message
From: "martha london" <marthalondon@hotmail.com>
Subject: Fwd: Znet Free Update / April 16 / Chomsky Comment on Debt
Date: Tue, 18 Apr 2000 06:30:31 PDT
>Znet--www.zmag.org--has a Sustainer Program which includes daily
>commentaries but also a forum system in which many of their writers and=20
>sustainers interact, including, among others, Noam Chomsky.
>
>In Chomsky's forum he was recently asked:
>
>"What do you say to the argument that the countries who borrowed from the
>WB/IMF have no right to ask for debt forgiveness (nor should anyone ask on
>their behalf) and should be held responsible for their debts like you or
>anyone else would? =85 And to what extent is the first world responsible for
>the debt crisis? =85 I guess in a nutshell I would like to better understand
>where the culpability of my own gov't lies (US), and where that stops and
>the culpability of third world govts starts."
>
>His answer in the forum is incredibly germane and clear about
>one of the key issues of global economic relations. Please visit
>www.zmag.org/commentaries/donorform.htm and read about the program.
>
>_______________________
>
>Reply from NC
>
>The simplest answer to the argument that countries who borrowed from the
>WB/IMF have no right to ask for debt forgiveness is that the presupposition
>is false, so the argument is vacuous. E.g., the "country" of Indonesia
>didn't borrow; it's US-backed rulers did. The debt, which is huge, is held
>by about 200 people (probably less), the dictator's family and their
>cronies. So those people have no right to ask for debt forgiveness -- and
>in fact, don't have to. Their wealth (much of it in Western banks) probably
>suffices to cover the debt, and more.
>
>Of course, this response assumes the capitalist principle. According to this
>principle, if I borrow money from you, use it to by a Mercedes and a
>mansion, and send most of the money to a bank in Zurich, and then you come
>and ask me to repay the loan, I'm not supposed to be able to say: "Sorry, I
>don't want to pay you back, take it from the folks in the downtown slums."
>And you're not supposed to say: "I got the high yields from this risky
>investment, but now that the borrower doesn't want to pay it back, the risk
>should be transferred to other folks in my country through socialization of
>the debt. That's the capitalist principle. It would suffice to largely
>eliminate the debt. Of course, that principle is unacceptable to the rich
>and powerful, who prefer the operative "capitalist" principle of socializing
>risk and cost. So the risk is shifted to northern taxpayers (via the IMF)
>and the costs are transferred to poor peasants in Indonesia, who never
>borrowed the money.
>
>The argument that "their country" borrowed the money so that they are
>responsible surpasses cynicism, and need not be considered.
>In fact, it doesn't even stand up under international law. When the US
>conquered Cuba in 1898 to prevent it from liberating itself from Spain (what
>is called "the liberation of Cuba from Spanish rule"), it cancelled Cuba's
>debt to Spain on the reasonable grounds that the debt had been forced on the
>people of Cuba without their consent. That doctrine, called "odious debt,"
>was later upheld in international arbitrarion, with US initiative. The
>current US executive-director at the IMF, international economist Karen
>Lissakers, pointed out in a book a few years ago that if this principle were
>applied to third world debt, it would mostly disappear. But that would mean
>that the capitalist principle would have to be observed: borrowers have the
>responsibility, lenders take the risk. And that plainly won't do, when the
>concentration of power makes it possible to socialize cost and risk.
>
>On first-world responsibility for the debt crisis, it is huge -- and in this
>case, the responsibility extends to citizens, insofar as their countries
>make possible some degree of participation in policy formation, and they do.
>The current debt crisis can be traced back to policies of the IMF and World
>Bank encouraging lending/borrowing to recycle petrodollars in the 1970s.
>Their very confident recommendations that this was just great for all
>concerned continued up to the moment of the Mexican default in 1982, when
>the system threatened to crash, and the same institutions stepped in to
>socialize cost and debt. Another factor was the sharp rise in interest rates
>in the US under the late-Carter/Reaganite policies of a form of "structural
>adjustment" here, undertaken with no concern, of course, for the fact that
>this would impose a crushing burden on third world debtors, as it did.
>Another factor, of course, is Western support for the murderers, gangsters,
>and robbers who borrowed the money for themselves and, naturally, don't want
>to pay it back, when they can get the burden shifted to the poor by the same
>institutions that created the debt in the first place.
>
>First world responsibility is enormous, so much so that if honesty were
>conceivable, those who supported folks like Suharto in Indonesia, drove the
>lending-borrowing craze (then bailing out the banks), and sharply increased
>interest rates as part of the further shift of power to the rich and
>privileged in the US (and that's not all), should be paying the debt
>themselves.
>
>The culpability of third world governments -- say, Suharto in Indonesia --
>is enormous, but remember that these governments are western clients,
>outposts virtually, whose task is to open their countries to foreign
>plunder, repress the population (by huge massacres if necessary), and enrich
>themselves if they feel like it (that's not a responsibility, just an
>incidental benefit accorded them). Suharto was "our kind of guy," as the
>Clinton administration put it, as long as he fulfilled this role. Much the
>same hold for other third world governments. Those that try to follow
>another course typically get smashed. E.g., Nicaragua has one of the highest
>debts in the world. The Sandinistas were doubtless corrupt, though not by
>preferred US standards, but that's not the reason for the debt: rather, the
>fact that the US waged a brutal and murderous war to get them back into
>line.
>
>Note again that culpability of our governments (and their institutions, like
>the IMF-WB) are also our culpability, to the extent that we have the
>capacity to influence policy, and don't.
>
>Noam Chomsky
>
>
>
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